257 F. 246 | 4th Cir. | 1919
The previous course of this litigation appears in the opinions of this court and the Supreme Court on former appeals. Leary v. United States, 184 Fed. 433, 107 C. C. A. 27; Leary v. United States, 224 U. S. 567, 32 Sup. Ct. 599, 56 L. Ed. 889, Ann. Cas. 1913D, 1029; Leary v. United States, 229 Fed. 660, 144 C. C. A. 70; United States v. Leary, 245 U. S. 1, 38 Sup. Ct. 1, 62 L. Ed. 113. A brief statement will disclose the questions now to be decided.
When Greene was arrested in 1899, charged with defrauding the government, he placed in the hands of Kellogg, his attorney, certain securities, represented by the fund afterwards paid into court, to indemnify Leary, appellants’ intestate, for going on his bond. The last bond signed by Leary was forfeited, Greene having absconded, and in a suit thereon the United States recovered a judgment against his estate, which was paid on July 26, 1910, amounting then, with interest and costs, to $40,802.
As this statutory fee is properly exacted from the person to whom the impounded money is paid, we think it was clearly correct to deduct 1 per cent, from the amount which each party received, and we perceive no reason why the government’s share should be diminished by the poundage fee on the estate’s share. Besides, if poundage be an item of taxable costs, like other required payments to the clerk, and recoverable as such from the losing party, as seems to be assumed in Blake v. Hawkins (C. C.) 19 Fed. 204, its allowance to the estate in this proceeding would be in effect to charge the government with costs, which is in no case permissible.
We come, then, to the principal claim of appellants, rejected by the court below, namely, that the Leary estate is entitled, as against the United States, to be reimbursed for its expenses and counsel fees in' prosecuting the intervention, and thereby establishing the validity and priority of its lien. The government first urges the objection, which applies also to the' $591.46 above mentioned, that this claim cannot be considered because not set up in the amended petition, which, save that it prays for general relief, demands repayment only of the judgment obtained by the United States. This objection loses its force when the exact status of the litigation is taken into account. The first appeal involved merely the right of the estate to intervene, which the Supreme Court sustained, and nothing else was decided. The second appeal turned on the question whether the evidence adduced was sufficient to prove an agreement to indemnify Leary, and whether the indemnity fund was represented by the Norfolk & Western stock. On this question the trial court ruled against the estate; but it was held on appeal, as above recited, that the estate had established a claim superior to the claim of the United States. There was no determination of the scope of that claim, for occasion did not arise to construe the indemnity contract in that regard. It was therefore proper for the court below, to which the cause was remanded, to permit an amendment of the petition, or to treat it as amended, so as to include a claim which is but incident to the main demand of the intervention. We think it should be examined on the merits.
The contract of indemnity appears in certain letters which Kellogg wrote to Leary in reference to signing the bail bonds of Greene. In the first of these, under date of December 14,. 1899, he specifies, the securities which Greene had placed in his hands, “as indemnity to you for becoming his bondsman. * * * It is understood that I am to hold these until you are released from the said bond, or in case that your liability should be established, that it is to be applied ■in payment of your obligation.” And later, in May, 1901, when another, bond was required, he says: “It will be necessary to renew the bail given by you for Capt. Greene, and for which I hold the security for your protection.” But how can it be said that this promise of indemnity and protection includes the expenses here in dispute ? Such an outlay is certainly not within the express terms of the undertaking, and in the nature of the case could not have been contemplated by the parties. As the estate’s right to reimbursement rests wholly and of necessity upon Leary’s want of knowledge that the government could have any claim upon the stock pledged for his security, it is impossible to assert that the expenses incurred in contesting that claim, when it was subsequently made, were intended to be covered by the indemnity agreement; and that contention of appellants may be passed without further comment.
In 35 Cyc. 416, where numerous decisions are cited, the rule in regard to the warranty implied on a sale of personal property is thus stated:
“A warranty of title refers only to tlie condition of the title at the time of the sale, and is a warranty only against a superior title, or existing incumbrances, and not that the title will not be disputed.”
But Leary did not “lose the property.” On the contrary, as the courts have conclusively held, he got a perfectly good title even as against the United States, with whose stolen money Greene had purchased the pledged securities. True, his title was assailed, and in defending it his estate incurred expenses of considerable amount for counsel fees and the like. But as the defense was wholly successful, and Leary’s title adjudged to be superior to that of the adverse claimant, there was no breach of Greene’s implied warranty of title, and consequently that warranty did not of itself make him liable for the expenses of the litigation. It follows, of course, that those expenses cannot be charged upon that share of the indemnity fund, which, subject to the prior right of the Leary estate, belongs to the United States as in law the successor in interest of Greene. In short, the doctrine of implied warranty does not sustain the appellants’ contention.
The further argument is advanced that in the government’s suit to recover the stock Kellogg’s attitude, as disclosed by his answer and otherwise, was unfriendly and even hostile to the Leary estate; that as trustee of the indemnity fund he failed to do what he should have done to assist and protect the estate; that in consequence it became necessary for the estate itself to intervene in that suit; and that therefore the estate is entitled to recover the expenses which it is alleged would have been allowed to Kellogg out of the fund if he had performed his duty. But this argument rests on an assumption which seems to us clearly erroneous. If Kellogg had from the first actively aided the estate, and in a contest in the original suit, substantially like that which actually followed the intervention, had established the validity of the Leary claim, on what theory would his expenses have been chargeable upon that part of the fund adjudged in
The claim for expenses here considered is clearly not within the terms of the indemnity agreement, and we are persuaded that it cannot be sustained on the theory of Greene’s implied warranty of title, nor yet on the theory of subrogation to the supposed rights of Kellogg, if he, instead of the estate, had carried on the litigation. Whatever its hardship, it is simply the case of a successful suitor whom the law compels to pay his own counsel.
Affirmed.